Thursday Corporate Bond Brief

Andrew Wilkinson submits:
While we know that the Fed is unlikely to move interest rates this year and possibly all of 2012, we should expect the occasional piece of positive economic data to come along and carpet-bomb the bond market on occasion. Today’s long-range missile came from an unexpected jump in manufacturing activity in the Chicago-area where manufacturers reported a healthy pace of activity. Yields continued to retreat from a recent nadir as equity prices similarly advanced. Corporate bonds came back in to favor with some spreads narrowing in light of increasing economic optimism.

Investment Grade

Lloyds TSB Bank Pls. (LYG)

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Shares in Lloyds TSB surged by more than 10% after its CEO announced a huge downsizing that allows the bank to focus on domestic retail issues. Bonds issued by the partially-government-owned banker, like many European issues, have failed to benefit from the recent slide in yields as investors shunned overseas bonds.Complete Story »

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Andrew Wilkinson submits:
A softer economic outlook from the Fed and ongoing concerns that a Greek debt default has the odds of a coin-toss forced a widening of corporate bond spreads relative to a healthy U.S. treasury market. Investors ran for the hills driving equity prices sharply lower and dismissed out-of-hand all observations that valuation remained cheap after a recent string of stock market losses.

Andrew Wilkinson submits: An early Monday morning commodity price rebound was insufficient to keep government bond prices downtrodden despite rising risk appetite in most parts. Dealers in the United States treasury market also tried pushing bond prices lower ahead of an auction of further supply but even that wasn’t enough to keep worrywarts satisfied.

ByAntonio Carradinha:
Historical events
A bank rescue announced by the British government on 8 October 2008 as a response to global financial crisis has made it possible that HBOS and Lloyds TSB were financed by the then newly formed Bank Recapitalization Fund.

Andrew Wilkinson submits: Equity investors reveled in signs of an improving labor market the day before an official government report that may yet deliver a disappointing reading. Stocks jumped after retailers put on their best performance in seven years, while The Wall Street Journal points out that 87% of them topped same-store sales predictions.

Andrew Wilkinson submits: Corporate bond activity was mixed Thursday as investors weighed up what to do next in light of a weaker than hoped for second glance at growth for the three months ending March. Weaker consumer activity weighed on sentiment dragging benchmark indices lower while propelling government bond yields to the lowest so far this year.

Andrew Wilkinson submits: Gyrations in the government bond market saw benchmark yields increase by 14 basis points above a midweek low that represented the lowest cost of borrowing so for in 2011. A resulting surge in corporate issuance has caught the financial headlines as corporate treasuries sought to tap the declining cost of funds and retire commercial paper in some cases for longer-dated debt.